Celsius Network Seeks Final Court Approval to Begin Customer Repayments by Year-End
During an October 2 hearing regarding the approval of its reorganization plan, the bankrupt crypto lender, Celsius Network, informed a judge of its intention to initiate repayments to its customers by the end of the year.
As per a report by Bloomberg, Celsius' recovery strategy involves transitioning into a user-owned Bitcoin mining operation named "NewCo." The company expressed its aim to return a portion of the funds that have been frozen on the platform since June 2022 to its customers.
Celsius Network's attorney, Christopher S. Koenig, stated during the New York bankruptcy hearing that the restructured company emerging from Chapter 11 will receive an initial funding of $450 million. This capital injection will come from a consortium called Fahrenheit LLC, primarily backed by the investment firm Arrington Capital, and will be tasked with managing the mining business.
According to a filing on September 29, Celsius Network intends to make partial repayments to its creditors using $2.03 billion worth of Bitcoin (BTC) and Ethereum (ETH), as well as offering stock in the new company. Customers would also gain a stake in legal actions against former executives, including co-founder and ex-CEO Alex Mashinsky, who faces fraud charges.
However, there are potential hurdles ahead. Judge Martin Glenn is currently evaluating Celsius's plan. Despite having garnered an overwhelming majority of votes in favor, it is reportedly being challenged by some creditors with frozen funds and Lantern Ventures affiliates. They argue that the new business has been overvalued. Additionally, the plan will need clearance from security regulators.
If the Celsius plan is ultimately approved, it would mark one of the first instances of a failed crypto
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